Wednesday, May 27, 2009

Fourth DCA Finds Arbitration Not Waived

In DFC Homes of Florida v. Lawrence (4D08-2798), the Fourth District reversed the trial court's conclusion that arbitration had been waived.

The court held:

"A party to an arbitration agreement waives the right to arbitration by active participation in litigation before asserting that right." (emphasis in original).


"DFC’s subsequent participation in discovery, i.e., depositions and interrogatories requested by Lawrence, was “limited in scope and . . .purpose . . . to obtain[ing] information relevant to the trial court’s determination of whether the right to arbitration was present.” Phillips v. Gen. Accident Ins. Co. of Am., 685 So. 2d 27, 29 (Fla. 3d DCA 1997). Again, the original dispute had been resolved at arbitration, and the substance or merits of the case or any new claims were never considered by the court."


A mere attempt to settle a dispute outside the courtroom cannot be considered inconsistent with a party’s right to arbitration. See Marine Envtl. Partners, Inc. Johnson, 863 So. 2d 423, 426 (Fla. 4th DCA 2003) (“A party claiming waiver of arbitration must show: (1) knowledge of an existing right to arbitrate and (2) active participation in litigation or other acts inconsistent with the right.”). Such a finding would make little sense, considering the object of arbitration is to facilitate the settlement of disputes and to avoid the formalities, delay, and expense of ordinary litigation.


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